Should You Hire Internally or Outsource?

The past few decades of unprecedented economic prosperity gave way to the introduction of several revolutionary makeovers that completely changed the game of businesses – for better or for worse.

This is, without doubt, to adapt to the world’s ever-changing needs and demands. Such shift in demands and trends has become apparent on how employers hire, for example.

Added with the rise of consumers, employers introduced a new way of getting necessary services: outsourcing. Indeed, from the traditional in-house hiring, outsourcing became a hot practice in many businesses, but did you know that many companies still frown upon it? Nonetheless, with many companies adopting such habit, it’s no secret that outsourcing is beneficial in many ways, though not in all aspects.

Outsourcing

Here, let’s examine the pros and cons of outsourcing, and the traditional in-house hiring.

What to do?

Pros

1. Reduced Cost

Probably the most influential factor why many businesses prefer outsourcing is the reduced cost in salary expense brought about by foreign labor. This is no secret especially in the US. Often, domestic labor is a lot more costly than abroad i.e China. The difference in cost allows business owners to utilize more outsourced services than when hiring in-house.

2. Reduced Overhead Cost

Lesser employees’ corollary lessens the cost associated with more employees such as payment of benefits, the cost of developing bigger office space, and the like.

3. Access to Expert Skills

Some tasks are highly specialized and thus require expert skills or systems. Outsourcing allows businesses to access the expertise of third-party contractors whose main function is to provide a particular service. This gives higher quality input and as a cherry on top, even lessens the cost and time in training in-house employees to do the same task.

4. Focus

Outsourcing to third-party contractors to do accessory tasks allows businesses to eliminate distractions, thereby allowing themselves to concentrate on their core functions.

Cons

Despite all these advantages, however, outsourcing may not be so attractive to some businesses. Here are some of the cons.

1. Loss of Control

Giving away some tasks to be performed by some third-party contractor implies that business owners relinquish their power to control doing some tasks. Of course, you may still communicate your requirements, specifications, and other demands but you can never truly control something unless you do it yourself.

2. Delays in Deliverables

For whatever reason third-party contractors may have, businesses, especially small ones whose orders are not as big as the larger corporations, usually find their operations delayed caused by the trickling effect of late deliveries.

3. Possible Issues with Quality

No one cares more about your product than you. This is where the irony sets in. Although outsourcing theoretically allows access to specialized expertise, there are many times when outsourcing nonetheless leads to a decrease in quality of service. This usually happens when businesses contract with the cheapest third-party contractors.

In-House Hiring

On the other hand, there is the traditional in-house hiring which many companies still prefer. Let’s examine its pros and cons, starting with the pros

Pros

Unlike in outsourcing, in-house hiring allows entrepreneurs to manage time and meet deadline. This allows a smoother flow in operation and avoids loss opportunity brought about by delays.

3. Keeps Creative Control

In-house hiring allows easier access to the step-by-step performance of a task, thereby keeping creative control in the hands of entrepreneurs

4. Satisfied Employees

We’re all social animals; in-house hiring means more employees. More employees encourage the spirit of teamwork amongst one another, where they feel the corporate spirit.

Cons

1. Limited Talent Resources

Having internal hires to work on the same project will limit your to certain stale ideas (inbreeding) that may then limit the possibilities of the the work. If there are special projects that needed special skills, having an internal hire work on those without any prior training may prove to be risky for the company.

2. Some Employees Could Get Bored

Having the same employees working on the same projects may cause some to be bored and pigeonholed and may then affect the results of the work.

2. Office Politics

With the same groups of employees working on the same projects over time, some may develop office politics that may affect the results of the project.

With all of these advantages and disadvantages in mind, you need to carefully look into the existing needs of the company and its current focus in order to weigh up the pros and cons of outsourcing or hiring in-house.

You might also look into providing more intensive training internally if the goal is to keep the quality control within the company.

At the end of the day, all business decisions need to lead towards a better bottom line and more efficient processes.

Jonha Richman is a Business Strategist with over 8 years of experience developing digital media strategies for FMCG and tech companies. She’s a regular contributor on The Huffington Post, Business Insider, Lifehack and Fast Company.